Bitcoin Whales Seize Opportunity Amid 20% Drop Following Launch of Spot Bitcoin ETFs
Summary:
Following the launch of spot Bitcoin ETFs in the US, the value of Bitcoin (BTC) fell by 20%, but larger investors used this opportunity to buy at a lower price, hoping to regain the $40k price level. With continuous reduction in GBTC's outflows and significant purchases by Bitcoin 'whales' during the market downturn, there's a sense of optimism for a Bitcoin price recovery. Bitcoin's RSI is also recovering from recent lows, suggesting a slowdown of the market correction. Achieving a price above the 50-day EMA is seen as a key indicator of market recovery.
Following the introduction of spot Bitcoin ETFs in the United States, the value of Bitcoin (BTC) has decreased by 20%, reaching a low of $38,000 on January 23rd. Nevertheless, significant Bitcoin investors - often referred to as 'whales' - have capitalized on the downturn, buying at the lower price with the intention to push the value back up to $40,000. Enthusiasm for this resurgence was apparent during trading on January 25th, where BTC's value rose again towards the $40,000 market, despite the day's fluctuations making it difficult to maintain.
The slowing of sell-offs from the Grayscale Bitcoin Trust (GBTC) is thought to be a key factor in nurturing optimism among traders. The introduction of Bitcoin ETFs had previously triggered a 'sell-the-news' reaction among traders, limiting momentum due to high sell pressure, largely stemming from large outflows from GBTC. It is speculated that this is attributable to investors opting for the lower fees associated with Bitcoin ETFs. However, data is showing consistent reduction in GBTC's outflows, a potential sign of decreasing sell pressure from investors previously unable to realize their GBTC investments.
Bloomberg's Eric Balchunas, senior ETF analyst, pointed out that while GBTC outflows have been decreasing, net flows remain significantly high at $824 million, despite outflows from other ETFs also slowing down.
Data from blockchain specialists Glassnode meanwhile shows Bitcoin 'whales' making significant purchases during the market correction. The number of entities holding 1,000 BTC or more rose from 1,481 on January 11th, when BTC spot ETFs trading began, to 1,533 entities on January 25th – representing a 3% increase. This behaviour suggests ongoing confidence among large-scale investors in Bitcoin's potential to exceed its 2024 high of $49,000.
Bitcoin's relative strength index (RSI) appears to be recovering from the recent downturn, as it starts to move away from an oversold position. This suggests the market correction might be nearing its end. From a technical standpoint, maintaining the $40,000 level will be crucial, and to signal a recovery, the price will need to move above the 50-day EMA increment. Markets could see bullish momentum pick up if the BTC/USD pair can rise above $44,700.
Note: As always with investment decisions, those interested should do comprehensive research; trading carries its own risks. This article does not provide investment advice or recommendations.
Published At
1/26/2024 12:00:00 AM
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